Section 201.076:

1. All of the service of an individual performed during a pay period for a person employing the individual is employment if the service performed during one-half or more of the period is employment.
   
   
2. None of the service of an individual performed during a pay period for a person employing the individual is employment if the service performed during more than one-half of the pay period is not employment.
   
   
3. This section does not apply to service performed in a pay period by an individual for a person employing the individual that is service that does not constitute employment under Section 201.061.
   
   
4. ‘Pay period’ means the period, not to exceed 31 consecutive days, for which a person employing an individual ordinarily pays wages to the individual.

Comment: Under Section 201.076, if the service performed during one-half or more of any pay period constitutes employment with less than one-half of the employee's service consisting of non-employment activities, all of the employee's services for that pay period constitute covered employment. If the service performed during more than one-half of any pay period does not constitute employment, then none of the services for that individual for that pay period can be deemed to be employment. The pay period referred to may be hourly, daily, biweekly, monthly, etc., except that the pay period may not exceed thirty-one (31) consecutive days. The pay period considered is the pay period customarily used with respect to the individual whose services are being considered.

Section 201.077 states:

"In this subtitle, ‘employment’ does not include service performed for a private for-profit person by an individual as a landman if:

1. the individual is engaged primarily in negotiating for the acquisition or divestiture of mineral rights or negotiating business agreements that provide for the exploration for or development of minerals;
   
   
2. substantially all remuneration, paid in cash or otherwise, for the performance of the service is directly related to the completion by the individual of the specific, contracted-for tasks, rather than to the number of hours worked by the individual; and
   
   
3. the service performed by the individual is performed under a written contract between the individual and the person for whom the service is performed that provides that the individual is to be treated as an independent contractor and not as an employee with respect to the service provided under the contract."

The U. S. Department of Labor instructed the Commission (in 1995) to classify Indian Tribal Councils as exempt for State Unemployment Tax purposes. Prior to that time, most Indian Tribal Councils were classified as political subdivisions. They were reported and paying unemployment taxes to the State of Texas and their employees were eligible for unemployment benefits.

After April 1995, in order to continue coverage for their employees the Indian Tribal Councils are required to voluntarily elect coverage under the Texas Unemployment Compensation Act.

This option is open to the Indian Tribal Councils ONLY. Companies operating on Indian land are still covered by the TUC Act.

HB 2029 – Federally-recognized Indian Tribes & their instrumentality’s are eligible to be reimbursing.

Service performed in the employ of a federally-recognized Indian tribe or any of it instrumentality’s will be considered as "employment." All other Indian tribes may continue to choose to voluntarily elect coverage but will otherwise be exempt.

There are only 3 federally-recognized Indian tribes operating in the State of Texas.

1. Alabama-Coushatta Tribes of Texas
2. Kickapoo Traditional Tribe of Texas
3. Ysleta Del Sur Pueblo of Texas

If federally-recognized then they are automatically liable if they have employment.

• Ownership (06)
• Subject under 201.025 since they are liable for FUTA
• If they elect to reimburse, ownership code will be changed to "21"

If not federally-recognized they can volunteer under 201.024 & ownership is "06".

In January 2001 section 201.048 – Service for Indian Tribes was updated as follows:

“Except as provided by Sections 201.063 and 201.067, in this subtitle, "employment" includes service performed in the employ of an Indian tribe if the services are excluded from the definition of employment under the Federal Unemployment Tax Act (26 U.S.C. Section 3301 et seq.), as amended, solely because of Section 3306(c)(7) of that Act.”

The Consolidate Appropriations Act (CAA) was amended under Federal law to cover how American Indian tribes are treated under FUTA.  Specifically the Indian tribes are now treated similarly to State and local governments, which means.

• Services performed in the employ of tribes generally are no longer subject to FUTA tax.
  
  
• As a condition of the participation in the Federal – State UC program

• Extended Benefit payments based on services performed in the employ of tribes no longer qualifies for Federal sharing.

Unlike State and local governments, if the Indian tribe fails to make required payments to the State’s unemployment fund or payments of penalty or interest, then the tribe will become liable for the FUTA tax and the State may remove tribal services from State UC coverage.

Are any services excepted from the required coverage of tribal services? 

Yes – The same services which may be excluded from coverage for State and local governments may be excluded when performed for a tribe.   These exceptions now provide that States are not required to cover services performed –

• “as a member of a legislative body, or a member of the judiciary, of a State or political subdivision thereof, or of an Indian Tribe.”  (Section 3309(b)(3)(B), FUTA)
• “in a position, which under or pursuant to the State or tribal law, is designated as (i)  a major nontenured policymaking or advisory position, or (ii) a policymaking or advisory position the performance of the duties of which ordinarily does not require more than 8 hours per week.”  (Section 2209(b)(3)(E), FUTA)

This section discusses the aspects of the law that apply to special type cases.

Persons serving apprenticeships, clerkships, etc. and receiving wages are in employment, since no exception to them is made in the Act.

Corporation directors who receive no remuneration other than directors' fees for attendance at directors' meetings are not in employment of the corporation. Other amounts paid to directors for services performed under a contract of hire or for services subject to the control and direction of the corporate officers or the corporate board of directors are deemed to be wages.

Examples:

Reference:

T.U.C.A. 201.076(a): if service performed during one-half or more of pay period constitutes employment, all services shall be considered employment (since in most circumstances, wages are for continuous service, it is unlikely that directors' meetings would represent the major service). Prentice-Hall [96-B] 09-28-90

A director is not an employee under the federal payroll tax laws and most of the state unemployment insurance laws. But, if the director also works for the company and draws a salary, his or her salary is subject to social security, unemployment tax, and withholding of income taxes.

Since a corporate director's fees are self-employment income, the director computes and pays the self-employment tax. Keep separate records of taxable and non-taxable income people draw. If you do this, you only pay social security tax on what's paid as salary. Otherwise you may have to pay tax on the entire amount when you cannot show which payments are exempt [IRC Reg. §31.6001-2(a)].

Election by the board of directors of an individual as an officer of the corporation and acceptance of this appointment by the individual fixes on the individual a continuing responsibility to perform for the corporation the services prescribed by the corporate by-laws. Services may be performed daily or less often. Control of such services by the corporation through its board of directors can be presumed, but the officer is not in employment unless wages are paid for such services. Any amounts paid by the corporation to an officer must be construed to be salary or wages unless the amounts received are a loan to the individual from the corporation, a dividend on stock in the corporation, professional fees, a repurchase of stock, or a reimbursement of business expenses.

Salary voted to an officer by the board of directors at the beginning of a calendar year is deemed to be salary for services performed each day in the calendar year unless the minutes expressly provide that the salary is for services performed for only a part of the year. In corporations where the stock is held by a very few individuals, salaries to officers are often voted by the board of directors at the end of a fiscal year. This situation presents the question of whether the officer has been in employment on each of the days in the fiscal year just completed. There cannot be a contract of hire between the corporation and the officer unless there is the promise of wages, either expressed or implied, at the time the services are performed. There may be an implied understanding that wages will be paid, even though there has not been an expression by the board of directors as evidenced by the minutes of board meetings. This implied understanding of a promise to pay wages may arise through the practice of the board of directors in past years of authorizing payment to its officers at the end of the fiscal year of a fixed salary in an amount determined by the corporation's ability to pay based on profits. In the absence of facts which might evidence an implied understanding that wages will be paid the officer for the year, a finding as to the employment status of the officer cannot be made until the end of the fiscal year. If salary for the fiscal year is voted by the board of directors, the Commission would presume that the officer was in employment on each day in the fiscal year, unless the minutes of the board of directors' meetings evidence a payment of wages for a different period. See Tax Supplement 176-74; read the Kenyon Case.

The officers of an association which is not incorporated under a charter from the State are usually (in Texas) in the same category as partners. Therefore, the officers are usually treated as partners and not as employees of the association. This is generally true even though the officers may receive remuneration labeled as ‘salaries’ for services performed.

In rare and unusual instances an association may be organized and conduct its affairs in such a manner that it has substantially all of the attributes of an incorporated business. In such a situation, after consideration in the State Office, the organization may be treated as a corporation, and the members and officers who receive salaries may be treated as employees. It does not follow, however, that any organization which is treated as a corporation by the Internal Revenue Service will be treated automatically as a corporation for purposes of the Texas Unemployment Compensation Act.

Services performed by aliens are not specifically excluded in the TUC Act. Employment status will be determined by an examination of the facts in each individual case.

Note: A foreigner or foreign exchange student with a work permit is generally found to be in coverage employment. However benefit payments are subject to review under section 207.043 of the TUCA. Subsequently, a foreigner without a work permit (an illegal alien) is generally covered for employment, yet under certain circumstances, the foreign employee may not be able to draw unemployment benefits, especially the illegal alien.

The Commission decisions have rather consistently held that pecan shelling services performed in the owner's plant are subject to the control and direction of the plant owner; hence, these services were found to be employment.

Persons who are paid on the basis of amount of work accomplished are given no special distinction under the Act.

An early Commission decision held that shrimp headers were not in employment. However, in most previous cases, shrimp headers were found to be in employment. The status of shrimp headers will continue to be determined by an examination of each case, and each case will be submitted for decision based upon its individual facts.

The length of employment, however short or casual, of an individual employee and the amount of the remuneration, however small, is not important. There is NO exclusion from "employment" for temporary or casual workers.

Normally the trustee of a trust and the executor or administrator of an estate is not an employee of the trust or estate. One exception is noted in Revenue Ruling 69-656 (Tax Supplement 135-74) in which a co-executor performed operational-type services for the estate under the direction and control of the other co-executors. He was held to be in employment of the estate under those circumstances.

A trust or estate is a different employing unit from the fiduciary (trustee, executor or administrator) managing the trust or estate. For example a trust management company, such as a bank, hires persons to work for one of the trusts which it manages. The persons are employees of the trust, not the bank.

An estate is a different employing unit from the deceased individual. For example, a father works for a son while the son is alive. Payments to the father are exempt under the TUC Act. The son dies and the father works for the son's estate. Payments to the father become wages since there is no familial relationship between the father and the estate.

Revenue Ruling 70-307 held minor children who were beneficiaries of their father's estate and who were employed by it to be in employment, provided it was being managed by an outside administrator (a bank).

Services provided by Registered Nurses (RN's), Licensed Vocational Nurses (LVN's), Licensed Practical Nurses (LPN's) and nurses aides are considered to be in employment. Employment status will be determined by an examination of the facts in each case regardless of whether the services were provided by the workers through a referral agency or whether the worker obtained the job assignment on his or her own initiative.

The Texas Bingo Enabling Act mandates that bingo in Texas can only be operated by an organization licensed by the Texas Lottery Commission and must be a religious society, a nonprofit organization (501(c)(3)), a fraternal organization, a veterans' organization, or a volunteer fire department.

The licensed organization is the employer for TWC purposes and is required by the Texas Lottery Commission to:

1. Designate an operator (one or more 2-year members) to run the bingo operation.
   
   
2. Maintain a separate bank account for all bingo activities;
   
   
3. Renew their license annually; and
   
   
4. Report the name, social security number, driver's license number, and address of each person who will work at the bingo games as well as the nature of the work to be performed.

License Renewal: Each year the Licensed Authorized Organization must renew their license in order to keep operating. At that time the application must include the name, social security number, driver's license number and address of each person who will work at the proposed bingo games and the nature of the work to be performed.

Texas Lottery Commission will also license individuals or organizations as an ‘Authorized Commercial Lessor.’ The lessor will only lease bingo premises to a Licensed Organization, and will not have any involvement with the bingo workers.

Employment status of workers will be determined by an examination of the facts in each case.

Until September 1, 2003, The Texas Bingo Enabling Act required that employers maintain separate tax accounts for each legal entity. The 78th Legislature amended the Bingo Enabling Act as follows:

Therefore, when two or more licensed authorized organizations, which conduct bingo on the same premises, jointly hire bingo employees they may be established as a single entity for tax purposes. If two or more licensed authorized organizations, which conduct bingo operations on the same premises, move their employees into a single tax account, it will be treated as an acquisition.

Total and partial acquisitions of bingo operating entities will be treated in accordance with established Status procedures at the time the acquisition occurred.

Any bingo operating entity established under this procedure that holds a 501(c)(3) exemption will be provided with the option of being a taxed employer or a reimbursing employer in accordance with specific Status procedures.

In no situation will there be a rate transfer when the successor employer has elected to pay reimbursements in lieu of taxes. The acquisition will be recorded with no rate transfer.

Under the NCSA, the Corporation for National Service is charged with operation of the AmeriCorp program and makes grants to states. The states grant the funds to local non-profit organizations and educational institutions which operate the National and Community Service Programs. The Corporation also grants funds directly to national non-profit organizations, state and local governmental entities and Native American Indian Tribes for public service programs.

AmeriCorp Participant: An individual who performs full-time or part-time public service in exchange for post-service educational benefits. Full-time participants receive a stipend for living expenses while enrolled. Participants generally perform unskilled service in one of four areas:

1. education
2. environment
3. public safety
4. human services

Under current TWC interpretation:

1. AmeriCorp workers employed by governmental and non-profit organizations will not be considered in covered employment for TUCA purposes;
   
   
2. Living expense stipends and post-educational benefits paid to AmeriCorp participants will not be considered covered wages for TUCA purposes. Payments to the AmeriCorp participants should not be used as wage credits in monetary determination, and should not be reported by employer to the Texas Workforce Commission.

Previous commission decisions have held that sheep shearers were not in employment. Status of these workers will continue to be examined on an individual basis.

In a Rule 13 decision dated January 23, 1990, the Commission held that individuals performing services as election judges, associate election judges, and deputy absentee voting clerks were not in "employment" but rather were independent contractors. Services performed by these individuals are considered to be "temporary in nature".

The Tax Department considers the above referenced decision as a precedent-setting case and will in all instances exempt the services of election workers from "employment".

Other regular or administrative employees employed by an election authority (state, county, school district, etc.) holding an election, are in employment.

To notify agency staff of the procedures to use in determining if payments made to temporary, emergency, work relief, or work training workers employed as a result of Hurricanes Katrina and/or Rita are “covered wages” for unemployment insurance reporting purposes.

Reference: ' 201.063(a)(1)(D) and 201.067(a)(3) of the Texas Unemployment Compensation Act, Labor Code (TUCA); ' 3309(b)(3)(D), '3309(b)(5) and '3302(a) of the Internal Revenue Code (FUTA); P.L. 109-72; UIPL 15-86.

Work relief or work training programs must have the following characteristics:

In addition, a work relief or work training program must have at least one of the following components:

Below is a chart illustrating the inconsistency between TUCA and FUTA as they apply to “emergency” and “work relief or work training” employment. FUTA excludes work relief or work training employment from non-profit organizations or governmental entities only, while TUCA makes no distinction in the type of employer. Therefore, under TUCA it is assumed that services performed by an individual who receives work relief or work training while working for any employer (public, non-profit or private, for-profit employer) are exempted from coverage for UI purposes.